28 July 2006 - 17:23IT transformation

I’m not the first person to write about the transformation of IT. It is pretty obvious when you look out there that you have today is not what you had 5 years ago, Microsoft, Oracle, IBM, HP, Apple, IT’s blue chips have changed dramatically. They are no longer pure tech-players: IBM moved into services, Microsoft and Apple moved into entertainment, Oracle is moving into HR and retail, etc… Sun is one of the last pure-tech players and, sadly, has a lot of problems.
Commodization of software infrastructure is the common theme of this transformation. Databases, application servers, operating systems, various desktop programs, even computer chips design or message-oriented-middleware infrastructure are starting to cost absolutely nothing. Right now you can get a pretty good computer (hardware + OS + applications) for close to 500$. The big IT behemoths have sensed this for a while and are starting to try different other business models, their former businesses turning into money-losing propositions.
Today it looks like that you cannot expect anymore to make money handling information (storing, querying, sharing, securing, etc…) except in very small niches (such as semantic queries, NLP, etc…). Is what you do with this information that will be valuable. It is the knowledge to actually work with this information rather than handling it that will be valuable.
My opinion is that this shift is part of the transition to a knowledge based economy, an economy in which the knowledge that you own and that you work with is valuable and not the way you push bits from a hard-disk to the network and viceversa. The applications that Oracle, MS and IBM have are IT infrastructure and in a knowledge economy IT infrastructure doesn’t add much value because its functionality is simple (or has become/will become simple) and therefore unprofitable. IT infrastructure is becoming a commodity.

In the words of late Peter Drucker: People tend to concentrate on the word "Technology" when faced with the term "Information Technology". It is time to concentrate on "Information".
It is time to do something with this information. Handling it has become a piece of cake.

P.S. A lot of open source usually stands for developing infrastructure software; think about Sendmail, various web-servers, application servers, etc… So when you see that whole applications are getting open-sourced (think CMS, shopping carts, catalogs, CRM, etc…) it is a good bet that these applications are actually infrastructure, that they are the building blocks for something bigger and more valuable. It means that while previously you were supposed to work at a very low-level with database tables, triggers and Java code, from now on you may have to work with whole application stacks. Of course, not all development will be like this, someone will have to create these applications. But more and more of the work will consists of integrating these applications in order to create something of value.